Friday, November 28, 2008

=DJ Sprint, Clearwire Complete Next-Generation WiMax Deal.
DOW JONES NEWSWIRES
-Clearwire Corp. (CLWR) and Sprint Nextel Corp. (S) have completed a deal to combine their next-generation wireless Internet operations.
-Sprint and Clearwire had said they will roll out Sprint's mobile WiMax Internet network, which is expected to reach as many as 140 million people, within 30 months of the deal's approval.
-At the close of trading Friday, Sprint's shares added 11.6% to $2.79 and Clearwire's were up 9.8% at $6.62. Clearwire gained 1.4% in post market trading.
-Intel Corp. (INTC), Google Inc. (GOOG), Comcast Corp. (CMCSK), Time Warner Cable Inc. (TWC) and Bright House Networks collectively invested $3.2 billion in the new company, which will retain the Clearwire name.
-Sprint will hold around 51% of the firm, existing Clearwire shareholders will own 27% and the new investors will hold 22%.
-Sprint, which has been struggling as its subscribership continues to fall, has considered several strategies to catch up with rivals AT&T Inc. (T) and Verizon Communications Inc. (VZ), including jettisoning the Nextel network or selling its long-distance network.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com
-Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=AhwCpQQ0pWKzJrCNi%2Bzc7w%3D%3D.
-You can use this link on the day this article is published and the following day.
-(END) Dow Jones Newswires November 28, 2008 13:50 ET (18:50 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 01 50 PM EST 11-28-08

Wednesday, November 26, 2008

DJ InsiderScore.com: Insider Buying Reaching 30-Year Highs
By Ed Welsch
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Insiders are buying their own company stocks at rates near the highs of 1975, a research firm said Wednesday, a sign that historically appears near a bottom point for the broader market.
More buying by company insiders has been a reliably bullish sign in the past, as insiders have proven better than average investors at calling the direction of their own company stocks and, when looked at as a group, the direction of the overall market.
However, during the current downturn even insiders have been fooled. InsiderScore.com's measurement of insider buying also spiked in March and in August and November of last year, though at lower levels. Those spikes marked false bottoms rather than real recoveries.
InsiderScore Research Director Ben Silverman said there were more signs that the current wave of insider buying is a more reliable sign of an approaching bottom.
Among the signs that give Silverman more confidence is that insiders across all industries are buying heavily, while the last three buying sprees were led by insiders at financial companies. In fact, buying among financial insiders this time is lagging behind insider buying in every other sector, he said.
Also, a larger percentage of highly placed executives like chief executive officers and chief financial officers are doing the buying this time, he said, as opposed to directors or junior executives. Statistically, trades made by top executives are more likely to be more savvy than those made by other insiders.
The overall rate and quality of the buying, as calculated by InsiderScore's proprietary algorithm, is also much higher this time. The algorithm's score of trades made last week reached 12,594. That's the highest level its ever reached in five years of collecting data, and nearly twice its previous peak of 6,398 after the Bear Stearns collapse in March. During the false bottoms of late last year the score reached in the 4,000-5,000 range, compared to a normal level around 2,000.
Silverman says that while exact apple-to-apple comparisons between the InsiderScore algorithm and historical data are hard to make, he believes the level of insider buying exceeds the level after the 1987 crash, when insider buying peaked near a bottom in the market, and is near the level of buying reached in 1975, when the market recovered from a long slump, with the Dow Jones Industrial Average rising nearly 40% during the first half of the year.
Before deciding to act on signs of broad insider buying, Silverman said investors should both consider whether insiders at the individual companies they are considering investing in are putting their money where their mouths are by investing in their own stocks, as well as whether the companies are likely to be in a stronger position after the economy recovers.
-By Ed Welsch, Dow Jones Newswires; 201-938-5244; edward.welsch@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=CvsyNdtZ0JgBkppd%2FRLX6w%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 26, 2008 16:00 ET (21:00 GMT)
Copyright (c) 2008 Dow Jones & Company, Inc.- - 04 00 PM EST 11-26-08

Thursday, November 20, 2008

DJ: GMAC Bonds Soar On Bond Holding Co Plan, Exchange Offer
By Kate Haywood Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The bonds of General Motors Acceptance Corp., or GMAC, jumped sharply, while the cost of insuring the firm's debt against a default fell Thursday after the firm confirmed it has applied to become a bank as it seeks money from the Treasury Department's $700 billion injection effort.
-The cash-strapped financier, 49%-owned by General Motors Corp. (GM), also announced offers to exchange $38 billion in notes from GMAC and its Residential Capital home-lending business for new securities with the same maturity dates and interest rates. The move would cost GMAC up to $2.5 billion in cash, it said.
-"If it gains bank holding status, GMAC will be able to access the Treasury's $700 billion rescue package, which will clearly improve its prospects in terms of funding and capitalization," analysts at Daiwa Securities said.
-As a result, GMAC's 7.25% bonds due 2011 charged 16.75 points higher to 52 cents, according to BondTicker. The company's 5.625% notes due 2009 gained 18 points in early trading to hit 80 cents, BondTicker shows.
-In the credit default swap market, where investors make bets on the likelihood of a company defaulting on its debt, the cost of protection on GMAC's senior bonds dropped slightly but remained at extremely distressed levels. The company's five-year CDS was quoted at 57 points upfront Thursday morning. This implied that investors would have to pay $5.7 million upfront plus $500,000 a year to protect $10 million of GMAC's' bonds against default for five years, according to CMA Data Vision. This is a modestly lower compared with late Wednesday when investors had to pay around $5.87 million upfront.
-"GMAC's application to become a bank holding company was already anticipated by the market," said Kingman Penniman, president of KDP Investment Advisors. "But until investors saw it in black and white [this morning], the market [for GMAC's bonds and credit default swaps] didn't move."
-GMAC offered investors combinations of new GMAC notes, GMAC preferred stock and cash. This will cut the firm's debt levels as part of its plan to become a bank holding company. Holders of GMAC bonds maturing before 2031 will receive new guaranteed GMAC notes with the same interest rate and maturity, the company said. Investors in GMAC notes maturing in 2031 will receive new guaranteed GMAC notes, new GMAC 8% subordinated notes due 2018 and new 5% perpetual preferred stock with a liquidation preference of $1,000, or cash, which will be prorated after $2 billion.
-The new guaranteed GMAC notes will be guaranteed by the firm's subsidiaries GMAC Latin America Holdings, GMAC International Holdings Cooperatief U.A., GMAC Continental, IB Finance Holding and GMAC US. These new notes will be senior to any subordinated notes at these subsidiaries and will rank equal with all existing and future senior debt of such note guarantor, GMAC said.
-In addition, GMAC offered to exchange its mortgage unit Residential Capital LLC or ResCap's 8.5% second lien notes due 2010 for new GMAC 7.5% notes due 2013. Holders of other ResCap notes, including 9.625% junior secured third-lien notes due 2015, can receive new GMAC 7.5% notes due 2013 and new subordinated notes or cash, which will be prorated after $500 million, GMAC said.
-This sent ResCap's bonds higher. The 8.5% bonds gained between six to seven points to around 31.5 cents, while 9.625% 15 cents from 11 cents Wednesday, according to Standard & Poor's Leveraged Commentary and Data.
-ResCap completed a $14 billion refinancing in June, which resulted in a downgrade to D on a host of the company's bond issues. Holders of bonds due in 2008 and 2009 received the 8.5% second-lien 2010 notes, and holders ResCap's bonds which matured in 2010 through 2015 got the 9.625% junior secured third lien notes. The exchange announced Thursday offers expire on 11.59 p.m. EST on Dec. 28
-GMAC's confirmation of its application to become a bank holding company and its exchange offer comes just days after Commercial-finance company CIT Group Inc. (CIT) announced plans to swap $2.2 billion of debt in an attempt to raise the amount of capital needed to become a bank.
-As banks, both GMAC and CIT could raise money at lower financing costs if they participate in the Federal Deposit Insurance Corp.'s guarantee program that provides government backing to debt from qualifying financial institutions.
-By Kate Haywood, Dow Jones Newswires; 201-938-2348; kate.haywood@dowjones.com (Mike Barris contributed to this article) Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=ZeJWYD76SSUIrDh7xN%2BBbg%3D%3D.

A somber Wednesday good evening,
Since the Presidential election a little over two weeks ago, the S&P is down nearly 20%.
IF President-elect Obama doesn't enunciate his tax policies more clearly in the days ahead, the unwinding of old money could continue regardless of how strong balance sheets look or how oversold charts appear. These are unbelievable times that we are witnessing.
On the day of the election, Mr. Carl Icahn was on Fast Money and said, "If this Obam-er wins, the market will not like it." http://en.wikipedia.org/wiki/Carl_Icahn We now better understand the power of those words; larger government and higher taxes in the midst of a global recession is something smart money fears.
Even though this is the worst bear market since the Great Depression, we do not believe there'll be soup lines or runs on banks. There are safe guards like social security and massive bank liquidity injections, unlike the 1930's, so we know the reaction of panic today is way overdone.
Just like we predicted oil would implode from the $120/barrel - $140/barrel area after the Beijing Olympics; just like we disagreed with Fast Money's Joe Terranova about his call that oil will not break $120/barrel for long a couple months back, we now feel the overshoot in the stock market has the same parallels and psychology driving it ...
The market is dying to hear President-elect Obama say 8 words: "I will not repeal the Bush tax cuts,". The S&P would rally through 1,000 within a couple days. POTC stands behind the bear market rally call, but it would help IF Mr. Obama stepped up and delivered.
The majority of the people who voted for him (college - under 30) do not have much riding in the stock market, so he needs to reinforce to the older conservative money he will not raise taxes. IF he doesn't do that, the market will have another climactic sell off, perhaps S&P 720; that would be the death of an entire generation of investors.
Could Mr. Obama want the market to fall further before he takes his Presidential Oath this January 20th on the steps of Capitol Hill? We hope not. POTC gave him the benefit of the doubt, as we felt he would be pro-active and more Wall Street friendly than the Carl Icahn's believed. So far we were wrong and they were right.
Mr. Obama needs to clarify his fiscal policies very soon, or investors will continue to sell until there is absolutely no doubt regarding who and how much tax is paid.
Raising taxes on individuals and businesses making over $200K a year now would be ridiculously ignorant, as they are the growth engine for jobs and have the greatest amount swirling around in the financial markets. We continue to believe Mr. Obama will do the right thing and tell Wall Street nobody's taxes will go up. But time is running out.
The Psychology of the Call team is dumbfounded by the valuations, technicals, and battered sentiment. We believe the Bush tax cuts will remain in effect through 2010. That is the panacea this stubborn bear needs to hear in order to dig the claws in & climb through S&P 1,000 by Thanksgiving Day, otherwise POTC will be eating stuffed crow!

Tuesday, November 18, 2008

Good Day to All!
Our call for a bear market rally stands. The S&P index has never traded this much below its 200 day moving average since the Great Depression. (Doug Kass- perma bear)
The two overhangs have been energy stocks due to falling crude and - obviously - financials. They weigh tremendously on the S&P. We believe the job cuts behind and ahead will only bolster bottom lines/earnings, therefore knocking down already ridiculous price to earnings multiples and exploding stock prices. Today's fundamentals offer a compelling reason to be long, even breaking the 2nd Commandment of Trading and going all in...
When the tide of a technical bear market rally comes in, it tends to have a tsunami effect on prices, raising 95% of sectors, so caution to all technicians calling for lower prices, and all seeking to find blame (government bashers). Many of the talking heads today are focused on a hyper doom & gloom scenario; we feel if you act on their advice, you will miss a 20%+ rally in the S&P, and larger moves in individual oversold issues like Chicago Mercantile Exchange (CME).
Profiting in the short run requires skills that combine technical, fundamental, and qualitative analysis. Our bear market call hinges upon the crippled psychology of the average investor coupled with the amount of cash on the sidelines in hedge funds.
We urge all forward thinkers to consider that bear rallies come when sector dislocations are occurring, and if you take a moment and study Citigroup (C, -6%) and Goldman Sachs (GS, +.06%) side by side on a daily chart, you'll see there is a tug of war that's sector internal and that strongly suggests one thing: A rally is about to begin.
Thanks to all who took time and answered the blog poll. As of today, President elect Obama's appointments have been approximately 30% conservative, usually deemed "Wall Street friendly"... We will continue to monitor these developments as they unfold.
We strongly believe the connection between politics/policy/legislation is critical to the financial markets, so the uncertainty this Presidential transition of power is causing has decimated equity valuations as though the world was coming to an end: IT'S NOT.
From the entire Psychology of the Call team, cheers to a great bear market rally that takes us through 1,000 on the S&P by Thanksgiving!

Sunday, November 16, 2008

Sunday greetings to all!
The uncertainy and pessimism has never been higher, and since many heavy-weight money managers are 50% in cash we see the S&P either rallying through 1,000 or breaking 800 by Wednesday's close. Ironically, here is an example of the fear level from the kings of hedging, half in cash?!?!?!:http://www.fiercefinance.com/story/cash-king-buyside/2008-10-15
The genius of Cohen and Jones must be respected, but please realize hedge funds are rarely in cash since their strategy calls for being dynamically hedged, for example: convertible arbitage, merger arbitrage, event driven, distressed securities, equity market neutral, and equity long/short, the focus of brilliant mathematician Jim Simons of Renaissance Capital Hedge Fund: http://en.wikipedia.org/wiki/James_Harris_Simons
When we see the most astute minds of investment finance overweight in cash, we believe the market will not remain hosatge in this trading range for long. Look for the S&P to either explode up or implode down ahead of Thanksgiving.
With the G20 summit over, 13F filings behind (http://www.sec.gov/answers/form13f.htm), and Presidential election results now fully discounted, the market is ready to move violently up through S&P 1,000 or down through 800. We wrote about the bear market rally in our last piece, and as gloomy a scenario we will offer in this article, we stick to our thesis nonetheless of a technical bear market bounce beginning on Monday, November 17th through at least Wednesday the 19th. What happens after Thanksgiving through New Year 2009 remains unclear, but we will revisit all factors related to Psychological Financial Fusion (a timely balance of qualitative, fundamental, and technical analysis focused on short-term opportunities) next Saturday night.
Here's a very important look at the S&P dating back to just post WWII levels. Please understand that long term charts make better sense during times of complete panic:
http://finance.yahoo.com/q/ta?s=%5EGSPC&t=my&l=on&z=l&q=c&p=&a=&c=
Notice the powerful move in the S&P from under 400 in 1990 to 1,500 in 2000. Also notice the pronounced double top break down in 2000 and 2008.
Microsoft's Windows software and many other computer related technologies/innovations spurred a tremendous rally from 1990 through 2000, agree? If you study the S&P chart, the sprint up from 1995 through 2000 may be a attributed to billions of consumers logging on to the information highway and transacting business from former non-capitalist nations, i.e. Soviet Union, Eastern European countries (Poland, East Germany, Romania, Ukraine), India, and the Chinese Dragon cannot be discounted.
Do you feel the internet super highway and chip technology will enhance...
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Friday, November 14, 2008

WASHINGTON (Dow Jones)--President-elect Barack Obama's transition team Friday unveiled teams of high-powered executives and former government officials to review the Securities and Exchange Commission, Department of Energy and other critical federal agencies in the run up to the inauguration.

-The president-elect's transition office said former Treasury Under Secretary for Domestic Finance Gary Gensler will lead the review of the SEC. Gensler, a former Goldman Sachs partner, was an adviser to Sen. Paul Sarbanes on the Sarbanes-Oxley Act.

-The SEC team also will include former Federal Trade Commissioner Mozelle W. Thompson and McKinsey & Co. partner William "Thomas" Dohrmann.

-Sylvia Mathews Burwell, president of the global development program at the Bill & Melinda Gates Foundation, will lead the team reviewing the Federal Deposit Insurance Corp., while James Johnson, a partner at the law firm of Debevoise & Plimpton and a former Clinton-era Treasury official, will lead the team reviewing the Commodities Future Trading Commission.

-The team reviewing the Department of Energy will be led by Elgie Holstein, a senior energy policy advisor to Obama, Elizabeth Montoya, a consultant with Sealaska Corp. in Juneau, Alaska, and Sue Tierney, a managing principal at Analysis Group. All three held posts in the Clinton administration.

-The teams are expected to begin their work immediately so senior appointees can hit the ground running at their departments as soon as they are sworn in.

You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires November 14, 2008 16:15 ET (21:15 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 04 15 PM EST 11-14-08

Wednesday, November 12, 2008

DJ Obama Taps Ex-Rep Leach, Albright To Meet With G20 Leaders
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WASHINGTON (Dow Jones)--Former Republican Congressman Jim Leach and former Secretary of State Madeleine Albright will be available to meet leaders from the Group of 20 this weekend on behalf of Barack Obama, the president-elect's transition team said Wednesday.
Obama won't attend Saturday's emergency G20 economic summit but will receive a briefing from Leach and Albright after their meetings. Details of those sessions, including which delegations Leach and Albright will meet, will be released at a later date.
"This weekend's summit is an important opportunity to hear from the leaders of many of the world's largest economies," said Obama Senior Foreign Policy Advisor Denis McDonough in a statement. "There is one President at a time in the United States, so the President-elect has asked Secretary Albright and Congressman Leach, an experienced and bipartisan team, to be available meet with and listen to our friends and allies on his behalf."
Albright was Secretary of State and U.S. Ambassador to the United Nations under President Bill Clinton. Leach, who backed Obama's presidential bid, is a former chairman of the House Banking and Financial Services Committee.
-By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; henry.pulizzi@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=gyqrrrOUgvITV9NeLavKMw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 12, 2008 12:04 ET (17:04 GMT)
Copyright (c) 2008 Dow Jones & Company, Inc.- - 12 04 PM EST 11-12-08

Tuesday, November 11, 2008

Warm November Greetings to All Forward Thinkers!
The ongoing global financial crisis has made perma bears look like geniuses, yet the Psychology of the Call team (POTC) senses the imminent appearance of a bear market rally for three good reasons.
1) President elect Obama's first speech, and his chief of staff pick, Mr. Emanuel, are very bearish for the market. We are confident both of those negative developments will change soon. POTC believes Mr. Obama's goal in the coming days and weeks will be to do everything popular in order to be re-elected to a second term in just four short years.
It's that second pivotal term where most Presidents are more inclined to show their true colors, especially in terms of openly hell bent policy. We remain confident and are prepared for the Thanksgiving Day Obama rally to begin this week, as his centrist appointments begin being leaked by hedge fund insiders. We are not waiting for New Year to enter long positions, as that seems to be the easiest and most ‘herdish’ trade today: we remain forward thinking contrarians and are going long on Tuesday.
We believe President elect Obama will appoint some Wall Street friendly names to his first cabinet/administration. He will do this to satisfy his political appetite to win that critical no holds barred second term in 2012, agree? Please answer the poll question regarding this issue on our blog: http:psychologyofthecall.blogspot.com/
Yet, IF he chooses to select only hard line left wingers, the market will not rally. After witnessing the extremely well planned and hard fought victory, we would be shocked to see a concentrated cabinet: it won't happen.
2) The pressure from Warren Buffett on President elect Obama to call for a change in mark to market accounting or announce a huge infrastructure stimulus plan plays a factor in our short term bullish call as well.
Berkshire Hathaway just reported a horrible quarter, and even if Buffett is okay with paying higher taxes, we know he does not want to see his almost perfect legacy wither, wilt, and die in his waning years:
http://www.thestreet.com/_yahoo/newsanalysis/insurance/10446832.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
Other recent Buffett investments in Goldman Sachs (GS) and General Electric (GE) have underperformed as well, and both of those companies will survive this wickedly panicked market.
3) The financial sector could begin to stabilize as it shrinks. The S&P is heavily weighted with oversold financials, about 20% of the S&P value lies in financials. Regional banks could begin bouncing with 50%+ buy-out premiums. Rumors abound that Citigroup (C) is very close to bidding for a regional bank with government TARP money.
http://biz.yahoo.com/ap/081110/citigroup.html?.v=3

This would ignite a type of forest fire under financials, forcing many perma bears to cover their seemingly bullet proof short positions.
We will take advantage of what we view as monopoly money about to be used to boost stocks like Regions Financial (RF) and/or Suntrust Bank (STI).
POTC feels the S&P index could settle above 1,000 by Thanksgiving, and as the bear rally gains momentum from one or two other positive developments mentioned above, then 1,100 on the S&P could well be reached before we wish you a Happy New Year.
We hope this trading alert helps you profit. We will be writing our standard Psychology of the Upcoming Week's Earnings & Economic Data and sending it to all subscribers this Saturday night...
Thank you for reading & sharing The Island Where Forward Thinkers Evolve, the Psychology of the Call team.

Friday, November 7, 2008

We hope you were able to take advantage of the artificial rally in solar stocks last Friday and Monday of this week by shorting on Tuesday afternoon, prior to the close. POTC did not send out an e-mail alert, but we posted links in the section above and mentioned that we considered solars and the S&P to be overbought. Look at a 5-day chart of FSLR, or LDK, or ENER, or the S&P 500. We made substantial returns this week buying puts on the above-mentioned stocks and the S&P.

We will launch our website next week and give you an opportunity to monitor our trades before offering an advisory service. Regardless of this economic environment POTC knows how to trade market mechanics, market psychology, and how to generate profits consistently. We do it every week and would like for you to do it also. We'll provide more details soon. In the meantime have a great weekend and remember, now that it's Friday and the weekend with all of its uncertainty beckons, Cash is King.